Cybersecurity is an area of technology that cannot be ignored today. With cyberthreats becoming increasingly more sophisticated, advanced threat detection and prevention solutions are now essential for organizations of all sizes. One stock in this space that is on the rise is Palo Alto Networks. It’s one of the largest players in the industry and right now, it's making moves to position itself for success in the AI era.
Next-Generation Security to Drive Long-Term Growth
Palo Alto recently posted its earnings for the first quarter1 of its fiscal 2026 and they showed that the company is growing at a healthy rate at present. For the quarter, revenue rose 16% year over year to $2.5 billion while non-GAAP net income rose 21% to $662 million. Importantly, the company’s Next-Generation Security segment - which provides comprehensive cybersecurity protection to customers via a “platformization” model - saw continued strong growth. Here, annualized recurring revenue (ARR) was $5.9 billion, up 29% year on year.
Looking ahead, Palo Alto Networks expects its Next-Generation Security segment to continue spearheading the company’s growth. For this fiscal year, it’s targeting ARR of $7.00 billion to $7.10 billion, representing year-on-year growth of between 26% and 27%. Looking further out, it’s aiming for $15 billion in Next-Generation Security ARR by 2030. In other words, it’s looking to more than double ARR here in the next four years.
Acquisitions for the AI Era
Now, Palo Alto Networks has never been afraid of making acquisitions. And recently, it has been strategically acquiring companies to obtain an edge in the AI era. For example, back in July, it announced the acquisition of CyberArk2 for $25 billion. It’s a leading player in both privileged access management (PAM) and Machine Identity meaning that it has the tools to manage security permissions for AI agents.
The company’s most recent acquisition - announced in the Q1 earnings - is that of Chronosphere3. This is a next-generation observability platform for the AI data center era that is currently seeing triple-digit growth in ARR. Management believes that this acquisition will strengthen its ability to help organizations navigate a world in which modern applications and AI workloads demand a unified data and security foundation. It is paying around $3.4 billion for the firm.
Wall Street is Bullish on PANW Stock
Put all this together and the future looks promising for Palo Alto Networks. With its platformization model gaining momentum and some strategic acquisitions on the horizon, it appears poised to solidify its position as a leader in the cybersecurity space.
It’s worth noting that since the company posted its Q1 earnings report, a number of Wall Street firms have reaffirmed their price targets4 for the cybersecurity stock. Currently, the average price target for PANW is $225, however, several firms have price targets of $250 or higher.
Footnotes:
1Palo Alto Networks, Palo Alto Networks Reports Fiscal First Quarter 2026 Financial Results, as of November 19, 2025
2Palo Alto Networks, Palo Alto Networks Announces Agreement to Acquire CyberArk, the Identity Security Leader, as of July 30, 2025
3Palo Alto Networks, Palo Alto Networks to Acquire Chronosphere, Next-Gen Observability Leader, for the AI Era, as of November 19, 2025
4Investing.com, Palo Alto Networks Inc (PANW), as of November 20, 2025
